Obamacare's Newest Fraud

If the Obama administration expended as much creative energy saving taxpayers money as it does obscuring the costs of Obamacare, we'd probably have a program worth saving.

But from day one, the health care law has been larded with double-counting gimmickry to conceal its $1 trillion price tag. It started by measuring eight years of services against 10 years of taxes, and it has continued with an avalanche of waivers that shield friends of the White House from the cost of the very law they helped pass.

We now have another unsavory example of how government-controlled health means politicized health care.

For about 12 million Medicare beneficiaries, private insurance plans lower costs and drive up quality. If the law had been followed as written, Obamacare should have slashed the popular market-oriented Medicare Advantage program this year. The cuts are needed to divert funding to a Medicaid expansion that will provide coverage to millions of uninsured -- the central case for the creation of Obamacare.

It's no surprise that Medicare's most market-focused program pushes down premiums and enrollment up. So rather than allow millions of enrollees in vital swing states, such as Florida, to experience a major benefit cut right before an election, the administration founded an $8.5 billion pilot program. This year, for example, the program offsets about 70 percent of the cuts in Advantage. The cost will be paid from the Medicare trust fund (which had a $288.3 billion shortfall this year). The consequences will be put off, conveniently, until after the election.

A new report by the Government Accountability Office, though, has called on the Obama administration to shut down that program for obvious reasons. There are two problems with this "demonstration program." First: It has absolutely nothing to do with quality or consumers.

Medicare rates Advantage plans on a five-star scale. Most Obamacare bonuses were supposed to be reserved for four or five stars. That's where $145 billion in "savings" will be extracted from over the coming decade. The program, judging by the administration's own reasoning, would not improve quality, because most of the money in the pilot program was paid out to three- and 3 1/2-star plans that it claims do not offer services worthy of those bonuses.

And the GAO is not alone in making this judgment. The nonpartisan Medicare Payment Advisory Commission stated that the entire pilot program "sends the wrong message about what is important to the program and how improved quality can best be achieved." MedPAC Chairman Glenn Hackbarth wrote to Health and Human Services Department officials and said the program "lessens the incentive to achieve the highest level of performance."

Second: It's a taxpayer-financed political slush fund.

In its report, the GAO said the size of the pilot project "dwarfs all other Medicare demonstrations -- both mandatory and discretionary -- conducted since 1995 in its estimated budgetary impact and is larger in size and scope than many of them." If it offers no benefit to quality and it uses more debt financing as "savings," then what reason but politics does it have for existing?

HHS spokeswoman Erin Shields claims that the pilot program's bonuses (which Obamacare would effectively eliminate for savings) help Medicare improve quality, as they "build on the improvements due to star quality ratings to learn how to best incentivize quality while we bring payments down." The most ironic aspect of all is this: There is already just such a program available that does exactly what this pilot program proposes to do; it offers more choices, incentives for saving and lower costs through competition. Best of all, it doesn't cost $8.5 billion to implement. It's called market competition.